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Student name: Pham Nguyen Hai Nam Student number: s3880892 Commercial Law Assignment 3 Lecturer: Dr. Loh Ing Hoe Hanoi campus

 Problem solving question: A. Adam v Thomson: I.

Issue 1: 1. Legal issue: Whether Adam could sue Thomson for violating the Unconscionable Conduct of ACL

and taking advantage of his illness. 2. Rules: a. Unconscionability means “unfairness”. Law will step in when one party has a special disadvantage while the other party is aware of that weakness and takes unfair advantage. b. In section 23(3) of ACL, a consumer is a person who acquires goods or services … if the price is more than $40,000, the goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption. c. According to Commercial Bank of Australia Ltd v Amadio, honor Justice Manson held that the bank manager knew about the special weakness of Amadios however the staff did not ensure that they understood the transaction. Thus, the bank taking advantage of the circumstance was unconscientious. 3. Application: Adam had been suffering from painful arthritis and was not able to write a one-page contract with Thomson. Thus, Adam emphasized Thomson to use the German equipment for the seeding. It stipulated that the price set for the work was 38$ per acre but Thomson took advantage of the fact that Adam could not read the contract before signing it and charged Adam for double the price. Moreover, Thomson also sent an envelope contain “disclaimer” as addition

clauses to the contract. According to Commercial Bank of Australia Ltd v Amadio, Thomson has taken advantage of Adam’s weakness and should have ensure that Adam understood the nature of the contract. 1 Following section 3 of ACL, Adam is not a consumer since he acquires the services for manufacturing his business at a price more than $40,000 ($38*2150=$81,700) 2. Therefore, he is not protected under ACL. 4. Conclusion Adam can sue Thomson under common law and the contract is voidable by him. II.

Issue 2: 1. Legal issue: Whether Adam could sue Thomson for misrepresentation under common law 2. Rules: a. Misrepresentation is a misleading statement of fact made directly to the other party which causes the other party to enter a contract. b. According to Derry v Peek, it is fraudulent misrepresentation when the trader made statement with intention to deceive the other party without caring it is true or false. 3. Application Thomson’s claims about using the German equipment to do the seeding are false, which

led Adam to believe and signed the contract. Otherwise, if Adam had known that Adam might not fulfill his demand, he would not have signed the contract. 3 Thomson committed a tort of misrepresentation. 4. Conclusion Adam might succeed in suing Thomson for misrepresentation of the contract. III.

Issue 3: 1. Legal Issue:

1 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 2 Competition and Consumer Law Act 2010 (Cth) s 3 3 Derry v Peek (1889) LR 14 App Cas 337

Whether Adam can sue Thomson for breaching the condition regarding the usage of German equipment. 2. Rules: a. A party can incorporate an outside statement into a contract if the following requirements are satisfied: -

Reasonable notice of the outside statement was given to the other party (Causer v Browne)

-

Reasonable notice given before the contract was formed (Thornton v Shoe Lane Parking)

b. “Essentiality test” is to distinguish whether a term is a condition or warranty. c. According to Parol Evidence Rule, the court may decide the outside evidence is a term of the contract if it is very important to the agreement (Van den Esschert v Chappel) d. The court will interpret the disclaimer strictly against the interests of the party seeking to rely upon it (White v John Warwick & Co Ltd) 3. Application: Before signing the contract, Adam asked Thomson that Thomson has to use the German equipment to finish the seeding in a month and he accepted the agreement. Thus, Adam gave reasonable notice to Thomson 4 before the contract was formed5. This outside statement can be included into the contract. Moreover, Adam made clear that using German equipment as well as finishing in a month was crucial for the contract. Hence, if Adam knew the term was to be broken, he would not have signed the contract. Therefore, according to “essentiality test”, the term is a condition and Thomson has breached it. However, the contract had a disclaimer that Thomson would not be responsible for damage resulted in loss for “reasonable adjustment” of the work nor from shortage of workers. Since the court will interpret the disclaimer against Thomson’s interest, breaching a condition would not be a mere “reasonable adjustment” and the shortage of workers also resulted in his conduct. 4 Causer v Browne [1952] VLR 1 5 Thornton v Shoe Lane Parking (1971) 2 WLR 585

4. Conclusion: Adam can successfully sue Thomson since he has breached a condition.

B. Timothy v Adam 1. Legal issue: Whether Timothy can sue Adam for not changing the ownership to Timothy 2. Rules: a. There must be consideration in all simple contract (Chappell & Co Ltd v Nestle Co Ltd) b. If a term is included in a written contract that is signed by the parties, it is an express term of the contract. Thus, it is a binding and enforceable term of the contract. 3. Application: Timothy and Adam had an agreement to transfer 80% of Adam Ranch Ltd for $100,000. Both parties had thought about the terms, understood, and sign the contract. Therefore, they bound by what they signed 6. The consideration is clear, and Timothy had prepared to pay Adam $100,000 even though Adam refused to take it. He also did not want to give part of the company to his son as a consideration 7. Therefore, Adam breached a term in the contract. 4. Conclusion: Timothy will be successful in suing Adam for breaching the contract.

C. Hugo v Thomson 1. Legal issues: Whether Hugo can Sue Thomson because there is a duty of care and tort of negligence in Thomson’s conduct 2. Rules: a. Established duty of care category (James, 2017, Business Law 4th ed., page 220) b. According to section 5 of the CLA there is a breach of DOC if the risk was foreseeable, the risk was not insignificant, and a reasonable person would have taken precautions. 6 L’Estrange v Graucob (1934) 7 Chappell & Co Ltd v Nestle Co Ltd

3. Application: Thomson is responsible for Hugo’s safety at workplace because there is an established duty of care between employer and employee. Moreover, Thomson should have foreseen that Chinese machines are not guaranteed for safety and a reasonable person should have checked if the machines were working well under wet condition. Therefore, Thomson has breached his duty of care as an employer to Hugo. 4. Conclusion: Hugo can successfully sue Thomson for breaching his duty of care to get compensation for his job loss and hospital fees.

D. Thomson v Farm Machines Ltd 1. Legal issues: Whether Thomson can sue Farm Machines Ltd for misrepresentation and breach of contract under common law 2. Rules: a. Misrepresentation is a false or misleading statement of fact made directly to the other party which causes the other party to enter a contract. b. Written contract can not be simply changed by outside statements (SkyWest Aviation Pty. Ltd. v Commonwealth of Australia) c. It is part of the contract if reasonable notice of the sign was given to the parties before the contract was formed (Thornton v Shoe Lane Parking Ltd) 3. Application: The written contract contained a clause specifying that Thomson must read the description of the Chinese machines on Farm Machines website. It states that the machines may not work properly under wet condition and the Fam Machines Ltd would not be responsible for any injuries 8. Thomson clearly read all the terms 9. However, the staff tried to convince Thomson that the Chinese machines can work

8 SkyWest Aviation Pty. Ltd. v Commonwealth of Australia 9 Thornton v Shoe Lane Parking Ltd

well under any condition, so they signed the contract. Thus, Farm machines Ltd provided Thomson with misrepresentation of the product. 4. Conclusion: Thomson can sue Farm Machines Ltd for tort of Misrepresentation but not for breach of contract since he clearly read the terms and signed the contract.

 Case Note Question 1. Introduction: Case name: Kadiroglu v Australian Motor Homes Ltd and Knotts Investment Pty Ltd trading as Avida RVs Court: Administrative Tribunal Parties:

Kaan Kadiroglu (Plaintiff) Australian Motor Homes Pty Ltd (Defendant) Knotts Investment Pty Ltd trading as Avida RV (Defendant)

Judge:

Senior Member J Ross

Decision Date: 19 June 2018 This paper will identify the legal issues and analyze the judge’s decision on applying the legal rules of the case. 2. Identification of legal issues: Facts of the case: The plaintiff is Kaan Kadroglu, while the defendants are Australian Motor Homes Pty Ltd ( the supplier or AMH) and Knotts Investment Pty Ltd trading as Avida Rv (the manufacturer or Avida). On 18 August 2016, the three parties signed a contract of purchasing van for Mr. Kadiroglu with AMH as the supplier and Avida as the manufacturer. The plaintiff advised AMH and intended to take the van around Australia for

12 months. However, the van had many defects throughout the plaintiff’s trip, and it took unreasonable time to fix these issues. The plaintiff argued that the defendants’ conduct had resulted in cutting short “my Australian dream holiday” and many inconvenient defects during his travel. In short, the important legal issue is if AMH and Avida breached the Australian Consumer Law (ACL) under section 54, 55 and 260. Plus, whether the plaintiff’s remedies are acceptable. 3. A critical analysis on the judge application: First, the judge considered if the defendant’s product to be acceptable quality10 or not. According to s3 of the ACL, the plaintiff falls into the definition of a “consumer” since he bought the van for his household use. Thus, it is reasonable for the judge to apply consumer guarantee. In ACL, section 54 states that goods are acceptable quality if they are free from defects. However, the caravan was not free from defects, in fact, there were many defects that occurred often during the plaintiff’s travel. Hence, I acknowledge with the judge’s conclusion that the defendant did not satisfy the acceptable quality in the ACL. Moreover, section 55 of the ACL states that there is consumer guarantee for disclosed purpose. In this case, the plaintiff relied on AMH and Avida’s judgement for using the van and holiday around Australia for 12 months. Thus, I believe that the judge can empathize more on this guarantee for the van to be reasonably fit to travel around Australia for 12 months. Second, to determent the available remedies, the judge had to conclude whether the defendant caused a major or minor failure. The judge employed section 260 of the ACL to decide that this failure was a minor one since it is not evidence that the matters can not be remedied easily and in a reasonable time. I totally agree with the judge that this failure was not major. However, I believe that this minor failure should be addressed more. The plaintiff stated evidence proving that he would not have purchased the van if he has known the failure of compliant with the guarantee. Thus, according to subsection (b) under section 259, the plaintiff might recover all reasonable costs or reject the goods.

10 Competition and Consumer Law Act 2010 (Cth) s 54

In addition, I find that the court’s decision regarding “what remedy is the applicant entitled to?” is unsatisfactory. The court only considered the facts of the repairing the van on 4 August 2017 to decide that the plaintiff can not reject the van. However, he should have taken in accounts many incidents happened before where the defendants failed to fix the van in reasonable time. Thus, the failure causes the plaintiff to lose faith in the defendants to fix in maintenance on time. In my opinion, the plaintiff should have the right to reject the van since the defendants violate the ACL many times. Lastly, I agree with the judgment for remedies that the Avida, the manufacturer, is to pay the plaintiff the sum of $2544 and the defendants must fix the defects in the best manner. I am satisfied with the plaintiff winning the case and the final decision. 4. Conclusion Beside my proposals, I agree with the Tribunal’s decisions. The AMH and Avida violated ACL under section 55,56, and 260 and resulted in compensating to Mr. Kadiroglu the reasonable amount....